How Challenging Is The Federal Used EV Incentive

Policy Environment for Used Electric Vehicle Incentives

When the Inflation Reduction Act was drafted, it had multiple goals, which can be loosely summarized as promoting clean energy, reviving the domestic industrial base, and making clean tech more affordable for consumers. Related to that is the Justice40 initiative, whereby the program design devotes substantial resources to direct these benefits to environmental justice communities.

EVs are very much a part of Justice40. Not only are the jobs important, but air quality is often poor in these communities. That is certainly the case in Connecticut with our bad and getting worse air pollution. (The new State of the Air report by the American Lung Association is due out next month. Keep an eye out if you want to get depressed.)

The early adopter profile for EVs, as with many products that represent a substantial purchase, is upscale. Though certainly helpful, new vehicle incentives alone may not be enough to reach a mass market. For EVs to displace internal combustion vehicles at scale, anyone who can afford to own a car needs to be able to afford an EV. The majority of vehicle sales in any given year are used vehicles. According to the Federal Bureau of Transportation Statistics, used vehicles accounted for 71% of all vehicle sales in 2019 (the most recent available data). And so, an incentive for used cars was incorporated into the IRA. The question is how easy is it for the consumer to access it.

Inflation Reduction Act Used EV Incentive Basics

These are the basic rules for the federal used EV incentive.

  • Purchase price cap of $25,000.
  • Only purchases through new or used car dealers are eligible.
  • The incentive is 30% of the purchase price, capped at $4000.
  • Purchaser income limit of $150,000 modified adjusted gross income for joint filers, $112,500 for head of household filer, and $75,000 for single filers.
  • Income eligibility can be determined by the current or prior year.
  • Vehicle model year must be 2 years older than the current model year.
  • Transfer provision can be used. This provision is new for 2024 and allows the buyer to transfer the credit to the seller and receive it as a point of sale rebate.
  • Minimum battery pack size of 7 kWh.
  • No more than one incentive per VIN. As a practical matter, this is a non-issue at this point. The incentives just haven’t been around that long.
  • Dealer registration with the Department of the Treasury is required in order for the consumer to receive the incentive. There are specific registrations for both the tax credit and for the transfer.

None of the new car rules regarding domestic assembly, battery mineral sourcing and manufacturing, and foreign entities of concern apply to used vehicles.

Dealer Registration

In order for a consumer to receive the incentive (new or used), the dealer that sells the vehicle must be registered with the Department of the Treasury (IRS). Not every dealership is registered. Unfortunately, there is no publicly available list of registrants, which we regard as a big oversight on the part of Treasury. It is necessary to contact the dealership you are thinking of visiting, though some have proactively advertised their participation. Based on what we have been hearing through our conversations with the Electric Vehicle Association, about half of new car dealerships have registered and a much lower percentage of used car dealerships.

We have heard various reasons why a given dealership may not have registered:

  • Dislike of the IRA.
  • Not interested in selling EVs.
  • Registration declined by Treasury for whatever reason, for example an incomplete application.
  • Registration still in process.
  • Affiliated manufacturer doesn’t make incentive-eligible EVs so why bother, or why bother just for used EVs.
  • Avoidance of non-mandatory involvement with the IRS.

This blog reached out to the two largest used car chains, CarMax, which is the largest by a mile, and Carvana. In both cases, these companies are set up to provide the Time of Sale report so the customer can claim the tax credit, but neither is registered for the transfer. CarMax is at least thinking about it. In their response to our inquiry, they wrote, “…We anticipate developments on the credit transfer in the future.” If we hear about a subsequent update, we will publish it!

Tesla

As with the new vehicle incentives, Tesla is also registered to process both the tax credit and the transfer for used EVs.

Used EVs are an Underdeveloped but Important Market

Our view is that the transfer is very important for the used EV market since there will be a higher incidence of consumers unable to make use of a conventional tax credit. (These tax credits are non-refundable, meaning if you are not able to use it, you lose it, and there is no carry-forward provision.)

We do not have access to a subscription service that tracks vehicle sales. Our very back of the envelope calculation, filtering for vehicles registered in 2023 with a model year of 2021 or older indicates that roughly 5725 used EVs were sold in CT last year. So, not nothing, considering there were about 18,000 overall EV registrations occurring last year.

Private Sale Workaround?

This incentive structure with the registration was designed to work through dealers and does not apply to private sales. However, a company called KeySavvy, which has a dealership license, is offering to facilitate private transactions via its dealership status and does offer the transfer. (We do not have personal experience with them.) This is a sceengrab from their website. If any readers use them, please let us know how it goes.

Key Savvy

State Incentive

This article mainly focuses on the IRA, but there is also a CT CHEAPR incentive for used EVs. It is part of the Rebate+ incentives that are available for households with income of no more than 3 times the federal poverty level or that are located in an Environmental Justice or Distressed Community. This is a true point of sale rebate, not a tax credit, and it gets deducted from the invoice price. It is $3,000 for a battery electric vehicle and $1125 for a plug-in hybrid. Rebate+ also offers an added incentive for new EVs and the total of the base and + incentives are $4250 (BEV) and $2250 (PHEV). To avoid a suspenseful purchase experience, consumers can register in advance and obtain a pre-qualification voucher from DEEP. Vehicle eligibility for this rebate is limited to vehicles that were eligible when new. Eligible vehicles can be found on this page of the CHEAPR website. The website also has a link to which communities are EJ/distressed.

Usual Disclaimer: As always, we seek to provide the most up to date information but things change and it is always advisable to check when shopping for a car and to check with your CPA.




The Geography of Federal EVSE Tax Credits

Federal Tax Credit for Buying/Installing EV Chargers

Before the passage of the Inflation Reduction Act, every residence was eligible for a tax credit of 30% of the cost of the purchase and installation of residential EV chargers up to a cap of $1000. That old credit expired but the Inflation Reduction Act brought it back in a geographically restricted form. (There is a separate program for commercial.) Eligibility is restricted to distressed and non-urban census tracts. After waiting a good long time, and just in time for 2023 tax filings, the IRS has only recently completed its rule-making regarding exactly which census tracts are eligible. Below are the map key and static screenshots, zoomed in to show as much detail as possible. These came from this Department of Energy  interactive map. There are different types of tracts denoted and color-coded, which expire at different points in time. The IRA is around through 2032 but all of these expire by the end of 2030. Note to self: find out why. Perhaps due to the new census, though it feels too soon.

Map Key

Map Key

Southwest CT

Census Tract Codes - SW CT

Northwest CT

Census Tract Codes - NW CT

Northeast CT

Census Tract Codes - NE CT

Southeast CT

Census Tract Codes - SE CT




Transfer Provision is Now Live

Fisker Ocean pictured above

Transfer Provision Details

The transfer provision is now in place for the federal incentive. This allows the buyer to transfer the tax credit to the seller and take the incentive as, in effect, a point of sale rebate, even if it technically still is a tax credit. Consumers still have the option to take the tax credit the old-fashioned way if they so choose.

The benefit of the transfer provision is the point of sale immediacy, but also the fact that a consumer does not need to have tax liability in order to utilize the credit. (The tax credit is non-refundable and has no carry-forward provision.) Another benefit of the transfer provision is that if you are financing the vehicle, it lowers the amount of interest paid because you are financing a smaller amount. The incentive does not lower the sales tax.

Dealer Registration

A dealership has to register at a portal created by the Treasury Department. This portal captures the transactions, the associated VINs, and enables the process whereby the Treasury issues reimbursement for the incentive to the seller and verifies the transaction at tax filing time. This applies to both new and used EVs. It also applies regardless of whether you are taking the transfer or the standard tax credit. In other words, if you are counting on the incentive, don’t waste your time speaking with an unregistered dealer.

According to Treasury press releases, about 50% of new car dealers have registered. This could still increase over time. Sellers of vehicles that are not eligible may not have a reason to register at present, though they would still need to if they sell used EVs. Not every dealer who registers gets approved, though we don’t have detail as to why that would be. Buyers of a vehicle from an unregistered dealer only get the standard tax credit.

Only a very small percentage of the 150,000 used car dealers have registered. Big sellers like Carmax and Carvana have not registered. Nor has Hertz which has been selling a large number of used Teslas.

There is no master list from Treasury delineating which dealerships have registered. This is very disappointing. The only option for consumers is to directly ask the dealership. (Some dealerships are advertising their registration.) We recommend making sure a dealer is registered before going there to shop if you are thinking about using the transfer.

The dealer issues a seller’s report for the transfer. You must get this before the car leaves the lot. If you do not, the only option available to you is the standard tax credit.

VIN Verification

Final determination of vehicle eligibility cannot be made until a VIN is available. Hopefully, dealers will be supported by their affiliated manufacturers and be able to accurately represent the status of a vehicle, including build to order.

Used EVs

A reminder, incentive-eligible used EVs must be at least two years older than the current model year and have not previously had an incentive associated with the VIN. Almost no used EVs have received an incentive, so for the time being the prior incentive consideration is largely beside the point. The income limits (see below) are half what they are for new EVs and the negotiated price must not exceed $25,000. Used EVs are eligible for the transfer provision. Hopefully, more used car dealers will register. In the near term, the transfer is more likely to be available from a new car dealer that also sells used EVs.

Battery Rules Lead to a Reduction in Eligible Vehicles

The new rules for 2024 are in effect, specifically higher thresholds for battery critical minerals, battery assembly, and the implementation of the first half of the foreign entity of concern (FEoC) rule. For the FEoC, no battery component assembly can take place in China as of this year.

A car must certified by the manufacturer that it meets the requirements and must appear on the EPA list at FuelEconomy.gov to be incentive-eligible.

It is not a surprise that the number of incentive-eligible vehicles has decreased. We expect a gradual recovery going forward as more North American assembly and battery plants come online, and more critical minerals come from eligible sources.

Income/MSRP Cap

The non-battery-related provisions of the incentive rules remain in place.

The income limit is $300K/$225K/$150K for joint/head of household/individual filers respectively. This refers to modified adjusted gross income. You can fulfill this requirement with either your current or prior year income. There is one exception to this, which is if you get married during the year you bought the vehicle and the income of your new spouse put you over the limit, you would not be disqualified.

The federal incentive has an MSRP cap of $55K for sedans and $80K for an SUV. The definition of MSRP includes factory-installed options but not software.

Discounting

We have been seeing reports that several manufacturers, and we have specifically seen reports of GM, Ford, and Hyundai, discounting vehicles to partially or fully compensate for the lack of an incentive. This is an example from GM Authority. Discounting is even better than an incentive because it lowers the sales tax.

Leasing

None of this changes the fact that these rules don’t affect leases. The finance company that holds the lease receives the incentive and it is not subject to battery, assembly or any other rules. The lessor is not required to pass the incentive to the consumer. And leasing costs tend to be opaque due to the different factors that determine them. That places a greater burden on the consumer to obtain the specifics of if/how the incentive is incorporated into the monthly rate. All of that said, however, EV leasing has shot up rapidly, as can be seen in this chart from The Peterson Institute for International Economics, using data from Edmonds. The biggest increases are from non-North American brands, so apparently, the incentive is getting passed along.

EV Leasing and IRA

 

 

 




Here’s What Is Going On With The Federal Incentive

The Chevy Blazer, pictured above, is one example of a vehicle losing the incentive.

Most EVs Lose Federal Incentive Eligibility

Unsurprisingly, as we have been forecasting for months, many EVs lost eligibility for the federal IRA incentive. This is due to the step-up in battery critical minerals sourcing and battery component manufacturing requirements, as well as the first half of the implementation of the foreign entities of concern rule. EV advocacy groups, manufacturers, and others have provided input to the Treasury Department during the public comment periods as this was all foreseeable. But not many changes were made.

Below is the list of every BEV and PHEV that is incentive-eligible as of January 4. This is fluid, and vehicles that have lost eligibility can regain it at any time. Manufacturers are wrangling their supply chains to become IRA-compliant as quickly as they can. These are screenshots directly from the Department of Energy (DOE) Website. We advise checking the DOE website for updates if you are in the market as it is updated continuously. We expect to be in this period of volatility for a couple of years.

BEVs

Incentive-eligible BEVs

PHEVs

Incentive-eligible PHEVs

There are some notable absences here, such as the two less expensive trim levels of the Tesla Model 3, every GM vehicle not named Bolt, and the Ford Mustang Mach-E to name a few.

Notice what is listed to the right of each MSRP: “Check VIN.” The DOE website is intended as a general guide, but the determination for a specific vehicle is made at the level of, well, the specific vehicle. Manufacturers must register eligible VINs with the Treasury. Consumers must list the VIN on their tax return and are able to check VIN eligibility on the DOE website.

Same Model, Different Incentive

Different vehicles of the exact same make/model/model year can have different incentive eligibility. It could be due to changes in manufacturing supply chains during the model year. It could be timing, as model years are most frequently introduced in the fall, but the requirements change on January 1. The eligibility is also based on the “date placed in service,” which is the date the consumer takes possession. An eligible vehicle on December 31 may no longer be eligible on January 1. (Part of our input was to align the requirements with model year to minimize this. Manufacturers suggested at least basing it on the date of manufacture.) Finally, as foreign automakers stand up manufacturing in North America, there can be a mix of imported and domestically produced vehicles of the same model, potentially on the same dealership lot.

Yellow Flag

If a vehicle is purchased from inventory, there is a VIN. But for build to order purchases, there will not be a definitive incentive eligibility determination until the VIN is available, which is often a short time before delivery. In a dealership environment, where salesperson EV knowledge can be lacking, consumers will need to be vigilant. We wish there were an easier answer.

GM Workaround

GM lost incentives for all its EVs other than the soon to be discontinued Bolt but is discounting those previously eligible vehicles by $7500 until they regain eligibility, as reported by Reuters and others. GM attributed the incentive setback to minor components which are being re-sourced and expected fairly soon. Anyway, a discount is even better than an incentive because it also reduces the sales tax.

Reminders

None of this incentive mishegoss applies to leased vehicles. However, the seller has discretion regarding whether to pass along the incentive.

The transfer provision goes into effect this month. Tax credits can be transferred to the seller with the consumer receiving a point of purchase rebate. It also benefits buyers who would not otherwise have enough tax liability to burn off a tax credit.




EV Club 2023 – Year in Review

 

2023 was a notable year for the club as it produced a fully subscribed symposium and began a partnership with People’s Action for Clean Energy (PACE).

Northeast Electrical Vehicle Symposium

The EV Club produced its first conference, along with an EV showcase, in conjunction with the CT Tesla Owners Club. It was fully subscribed and is planned to be an annual event. It was hosted at the zero-emissions, LEED Platinum Hotel Marcel in New Haven, and covered topics ranging from the Advanced Clean Cars regulations to electrifying one’s home, EV incentives, utility programs, local EV-friendly zoning and a keynote from You-Tuber Out of Spec Dave. Recap here.

PACE

We have been working increasingly closely with the PACE (People’s Action for Clean Energy) organization. Our collaboration began with data, as we contributed the vehicle data we obtain to the data they use to analyze municipal energy use. This is a service that PACE offers this free to any municipality – they’ll quantify energy use and show where there are opportunities to move to decarbonize.

We are aligned on policy as both organizations support direct sales, regulations for clean vehicles, the Energy Data Bill of Rights, and expanded distributed and shared solar.

We support each other’s events. This allows each of us to improve coverage throughout the state.

PACE offers a number of services for communities, including supporting HeatSmart campaigns for heat pump adoption, help with solar canopy siting, and data on building efficiency.

Finally, PACE has also been giving the club some financial support. We may be a volunteer organization, but we do have expenses! They also accept donations on our behalf. Go here. After clicking on an amount, you will go to a page that allows you to designate how you would like the donation to be used. Choose “create your own,” and type in “EV Club.”

First Responders

The EV Club continues to support our first responders when they hold EV training events. This year we worked with Fairfield, Windsor Locks, Northville, and Middlebury.

Incentives

Incentives are now more numerous, more complex, and a moving target. We decode them and keep up to date with changes for the federal and state EV purchase incentives, as well as the charging incentives offered by the utilities. This is our incentives page. We have worked with a number of individual members to sort through these and help with questions. We also had the opportunity to speak at length with Eversource regarding how to operationally improve the consumer experience with respect to incentives and dealing with voltage sags and transformer sizes that could limit solar production.

Our near term outlook is that the Foreign Entity of Concern rules, the first half of which take effect in January 2024, will cause a reduction in the number of incentive-eligible EVs.

The other important near term item is the transfer option. This enables the consumer to obtain the incentive as a point of purchase rebate rather than a tax credit. The consumer has an option to do one or the other. Aside from getting the incentive sooner, it also enables people who do not have the tax liability to burn off a tax credit to be able to utilize the incentive.

EV Showcases

We continue to support as many EV showcases as we can by helping to publicize the events, and recruiting owners to exhibit their vehicles. We encourage all EV owners to participate in these as it is a great way to discuss the virtues of driving electric and leave out the politics. We also supported and participated in events by Electric Car Guest Drive in New York.

The Club itself staged 2 showcases, one in May and a second in September as part of the Symposium. We were happy to include a Tesla Model Y patrol car owned by the Westport Police. We thank the CT Tesla Owners Club for working with us on these and for arranging for Tesla to give test drives.

If you would like us to post your showcase event, please see this post about the information we need.

Speaking Engagements and Tabling

  • Stonington Energy Fair
  • Fairfield Warde High School
  • Interreligious Eco-Justice Network Forum on Advanced Clean Cars II, Greenwich
  • Central Connecticut State University

Zoom Meeting Presentations

  • SPAN – smart panels – what they’re about and what is involved in installing one in your home
  • Renowned teardown artist and automotive engineer, Sandy Munro, tells it like it is
  • IRA deep-dive into the EV incentives

Policy/News

  • Rivian, after fending off a dealership lawsuit, has broken ground on a service center in Shelton.
  • First Tesla Magic Dock in CT.
  • Participation continues with the national Electric Vehicle Association Policy Committee.
  • The last couple of years have been difficult regarding state level environmental legislation. Advanced Clean Cars II is stalled. It is possible it may come back but not certain. We continue to support a direct sales bill and the Energy Data Bill of Rights.
  • EV Club CT had a presence at the Cybertruck Reveal Event.
  • EV Club is happy to work with municipalities on EV charging, such as the new installation of 12 level 2 chargers (80 amp) in Westport.

EV Club Invited to Grand Opening of Tesla Sales and Delivery Center

This is the facility that is being built on tribal land at the Mohegan Sun Casino complex. The event is 12/20 and registration is here.

Much of the reporting in the mainstream press about this facility labels it as a loophole or a way to skirt the law. We believe this to be a mischaracterization. Tesla is following the law. Federally recognized tribes hold sovereign power on tribal land. It is up to the Tribal Council to approve such a facility and they don’t run scared from dealerships.

Data

We were able to bring the EV Dashboard back, tracking the level and characteristics of EV adoption in Connecticut. Access to data was granted courtesy of Atlas Public Policy, but sourced from the Department of Motor Vehicles.

Continued tracking of EV rebates by dealership, which is our proxy for which dealers are EV-friendly (applicable, obviously, only to those that sell CHEAPR-eligible vehicles). This typically gets updated around March of each year – it depends on when the data get published by DEEP.

Videos!

Find them on our YouTube channel

  • New electric police patrol cars in Westport and Wethersfield (Tesla Model Y and Ford Mustang Mach-E, respectively)
  • Owner video – Andre and his Polestar 2
  • Fairfield First Responder EV training
  • Sandy Munro and Corey Steuben riffing about all things EV and batteries (Meeting recording)
  • Inflation Reduction Act Deep Dive (Meeting recording)
  • Tesla Magic Dock Closeup
  • Smart Panel discussion with SPAN (Meeting recording)
  • Hotel Marcel Tech Deep Dive – Bruce Becker, Paul Braren, Will Cross

 




IRA EV Incentive Outlook For 2024

Post by Barry Kresch

Beware the Disappearing Incentives

There are 35 EVs (BEV and PHEV) listed as incentive-eligible by the Federal Department of Energy as of October 1, 2023. It is really fewer than that as the website breaks out the different trim levels. For example, there are 8 variations of the Volkswagen ID.4. The DoE website is here. It includes the ability to filter vehicles.

Tesla is publishing incentive alerts on its website, seen in the photo above, warning that some of its vehicles may lose full or partial incentive eligibility. Tesla is more public about it, but it is not alone in bumping up against the moving target of escalating in-sourcing requirements, the looming Foreign Entities of Concern rule, and ongoing IRS rule-making. From what we are hearing, most EV manufacturers could be affected, mostly because it is difficult to quit China as quickly as the legislation requires.

Battery Requirement Changes

These are the changes in the battery requirements that begin in January.

  • Critical Mineral Sourcing/Refining increases from 40% to 50%. This minimum percentage must come from either a domestic supplier or free trade partner.
  • Battery Assembly – the percentage of battery components that must be assembled in North America increases from 50% – 60%.

Foreign Entities of Concern

The rule that the manufacturers have voiced the most consternation about is the Foreign Entities of Concern (FEoC). This phases in beginning in 2024, followed by part two in 2025. The FEoC mirrors the battery regulations in that half of it applies to critical minerals and the other half to battery assembly. It is the latter half that starts in 2024 with the mineral portion following one year later.

Beginning in 2024, eligible vehicles cannot contain any battery components manufactured in a country so designated. The way to think about it is if you reference the 60% battery assembly requirement noted above, a manufacturer can source 40% of battery components from outside of North America in 2024. However, the FEoC rule specifies that none of that 40% can come from a FE0C. This is obviously about China, but other countries will fall into this designation.

We expect a number of vehicles to lose all or 50% incentive eligibility in 2024. Over time that will likely change, but the next two years are sure to be the most challenging as requirements tighten and new plants have not yet come online.

Ongoing IRS Rule-Making

A large rule-making task was quite literally dumped on the IRS in August of 2022. The wide-ranging IRA legislation, which encompasses much more than EVs, was passed in rather skeletal form, with the implementing agency, The Department of the Treasury, responsible for developing the specific rules. Sometimes this rule-making has run counter to the spirit of the legislation according to some of the legislators who voted for it. For example, the “leasing loophole,” which allows consumers to obtain incentives on vehicles that would otherwise not meet the requirements if purchased, came about because the IRS interpreted a lease as a commercial transaction. The vehicle is sold by the dealer or manufacturer to a captive finance company. This was defined as commercial. The fact that the finance company subsequently executes a lease with a consumer is beside the point from the perspective of the incentive. Commercial transactions fall under a different set of rules that do not include the restrictions that apply to consumer purchases.

Due to the short lead time, the ink has barely been dry on the rules at the time they are due to be implemented. Sometimes the IRS blows through the deadline. The first-year set of battery rules was postponed from January 1 to April 18th of this year for that reason.

The FEoC remains a moving target in this regard. The IRS has advised that the final list will be available before the end of the year, so potentially as little as 24 hours before it is due to go into effect. Maybe there will be an FEoC postponement, similar to what happened with the batteries.

How to Define FEoC

One of the big areas of contention involves not so much designating what countries fall under this rule, but how it is defined. For example, what if a Chinese company opens a plant in North America? What if it is a joint venture with a domestic manufacturer? What if a domestic company builds a factory but licenses technology from a Chinese company? The latter is the most minimalistic footprint and an example is the battery plant that Ford has begun building in Marshall, Michigan. The plant will be producing Lithium Iron Phosphate (LFP) batteries. Ford will own the factory. The workers will be Ford employees. The LFP battery chemistry IP is being licensed from CATL, the big Chinese battery company.

Last week, Ford announced it is pausing construction on this plant. Of course, the company is in the midst of contentious negotiations with the UAW, which is trying to include battery plants owned by the companies in which it has representation at parity wages. But Ford has also commented publicly that it is waiting for IRS determination regarding whether the IRA manufacturing and consumer tax credits are applicable to this plant. It has threatened to greatly downsize the plant if that is not the case.

VIN

While we hope that dealerships are able to offer consumers accurate information regarding whether an EV is incentive eligible, and in our experience Tesla has been pretty on top of incentives, the definitive way to know is to input a Vehicle Identification Number on this federal page. Of course, it would be better to know about eligibility further upstream, but that is what the government has provided.

Lobbying

There are lots of reports of furious lobbying behind the scenes, which occasionally spills into public view, such as the Ford battery plant. But there is more than that. Manufacturers would like to change the determination of vehicle eligibility from the “placed in service date” to the date of manufacture. They obviously have more control over the latter, and it buys them a bit of a grace period since it is earlier.

It has also been reported that manufacturers would like to get Vietnam designated as a free-trade partner for the purposes of battery critical minerals.

The Transfer Provision – Another Big Deal

Tax credits are not the most consumer-friendly form of incentive. You have to wait for it. And not everyone has enough tax liability to be able to use it. The transfer provision is the legislation’s way of turning the tax credit into a rebate. The buyer transfers the credit to the seller. The seller takes the credit and gets reimbursed by Treasury. Also, non-taxable entities can use the transfer provision.

My biggest concern is that the process won’t work smoothly when it is initially introduced. The IRS has been working on the process. It is yet another aspect of rule-making that will likely come down to the wire. Will the dealers and manufacturers be on top of it and not afraid to use it?




Northeast Electric Vehicle Symposium Recap

Photo at top taken under one of the solar canopies at the Hotel Marcel with the building in the background, from left to right: Daphne Dixon – Live Green CT, Paul Wessel – Greater New Haven Clean Cities, and Analiese Mione, Barry Kresch, Bruce Becker, and Paul Braren from the EV Club who organized the symposium.

“Sold-out” Conference

Well, it was free, but there was more interest than we were able to accommodate and we had to close registration. Early feedback has been extremely positive. such as this message:

“I attended the NEEVS yesterday and had a fantastic time. What a great lineup of speakers/presentations and lots of fun at the car show as well! I’m looking forward to future symposiums in the coming years. …. Again, I had a great time at the symposium (and the lunch was incredible).”

We would like to thank our sponsors: Live Green CT, Greater New Haven Clean Cities Coalition, EVConnect, Maxwell Vehicles, and ChargePoint, without whom we would have been munching on stale pretzels.

Of course, we also thank our attendees for joining us and being an engaged and interactive audience.

The Hotel Marcel provided excellent, eco-friendly hospitality. For anyone who may be nervous about switching from a gas to an induction cooktop, the quality of the food attested to how good induction cooking can be. Even the chafing dishes were induction.

We’ve had some comments about how a small committee was able to put together a jam-packed agenda in a short period of time. If anything, the challenge is less about finding content than winnowing it down to fit within our time parameters. As it was, our 3-hour speaker agenda took 4 hours with too little time for Q&A.

We want to give a shout-out to Rich Jordan, president of the CT Tesla Owners Club, for his help with the car show, to the Westport Police Department and their Model Y patrol car, and to Tesla for bringing vehicles for test drives.

Converted EV Van

Maxwell Electric Shuttle at Hotel MarcelHotel Marcel architect and developer, Bruce Becker, talked about how Maxwell Vehicles converted an ICE van to electric, using a salvaged Model 3 battery and drive train. This van gets a lot of use shuttling guests to downtown New Haven, Yale, Union Station, Tweed Airport, and other destinations.

 

 

 

 

Out of Spec Dave

YouTube and X (Twitter) personality, Out of Spec Dave from Greenwich, CT, talked about his adventures as a road warrior, having driven lots of different EVs and experienced the many faces of public charging. Not all of them are happy faces. Part of the charging experience is knowing before you get to a charger whether the charger is in service and how fast it is charging. There is a gap in the eco-system here. He has launched the “Rate Your Charge” newsletter. Take a video or photo of your charge, describe your experience, and tag @outofspecdave on Twitter. These are being compiled in a weekly report posted to Twitter. For those not on Twitter, use this Google Doc: https://docs.google.com/forms/d/e/1FAIpQLSd9nE1JOulqidJNacpL230TdswfnnaWBTjdGIaky3ffkHF6EA/viewform?pli=1

Rate Your Charge - Out of Spec Dave

PACE

Mark Scully from People’s Action for Clean Energy (PACE) spoke about their program to help municipalities decarbonize and save money in the process. This slide illustrates the cost savings projected in a transition to renewables.

Cost Savings with Renewable Energy

United Illuminating

We get many questions regarding whether widespread EV adoption will crash the grid. While the grid does need to be modernized (and the Public Utilities Regulatory Authority has a grid modernization docket), Rick Rosa from Avangrid/UI discussed using EVs to optimize the grid. This slide is an example of optimization vs curtailment. EVs will be beneficial to the grid for the foreseeable future and, as such, there are incentives for EV owners to participate. See our incentives page for a more detailed description of the program with links to sign up for the residential or commercial incentives. This program is also offered by Eversource and it can offset the costs of buying and installing a 240 volt charger, as well as pay an ongoing incentive to participate in their managed charging programs.

Charging Curtailment with Optimization

Zoning for EV Readiness

Daphne Dixon of Live Green CT, who has done a lot of work with municipalities, gave a presentation that illustrated the complexity of zoning for EVs but also highlighted the significant benefits as noted in the example below.

EV Zoning Opportunities

All Electric, Zero Emission Home

Paul's Home with Tesla Roof

Paul Braren provided a detailed description of his journey to create an all-electric home (solar roof seen in the photo, powerwall/VPP, 2 EVs, insulation for home and windows, heat pumps, smart panel, electric garden tools) and capture the available incentives. It has been a complicated road. This links to his full presentation.

IRA Transfer Provision

In his update on incentives, EV Club President, Barry Kresch, discussed the implementation of the transfer provision in 2024, and how it changes a tax credit into a point of sale rebate.

IRA Transfer Provision

Advanced Clean Cars II

CT is a participant in the California Air Resources Board emissions requirements. It is now in the process of implementing the second phase of these regulations, commencing in 2027 through 2035. The rules require manufacturers to sell increasing amounts of zero emission light-duty vehicles, reaching 100% in 2035.  There is a separate set of regulations that would significantly lower emissions for medium and heavy-duty vehicles during this same period. Charles Rothenberger, Climate Attorney for Save the Sound, explained these regulations. The legislature has authorized CT DEEP to proceed with the required multi-step process. The slide below shows where we are and the remaining steps.

steps to implement advanced clean cars 2

There is some concern that when the rules go back to the legislature, in which a bi-partisan review committee is supposed to examine them for legal sufficiency, that there may be an effort by opponents to short-circuit the approvals process. More on that to come.

We hope you see you next time!!!

 




Northeast Electric Vehicle Symposium (NEEVS)

The Symposium is Sold Out – People Can Still Come for the Car Show

Get charged up at NEEVS, the ultimate gathering for EV enthusiasts, policy wonks, and all who seek cutting edge guidance on decarbonization.

Please join us at the first annual Northeast Electric Vehicle Symposium (NEEVS) at Hotel Marcel in New Haven on September 9, 2023. EV enthusiasts, electrification and decarbonization advocates, sustainability volunteers and professionals, municipal employees, real estate owners and developers and policy wonks are invited to join us.

Bruce Becker is the lead architect and owner/developer of Hotel Marcel in New Haven, the country’s first zero emissions and Passive House hotel, and Chairman of the EV Club of CT. Bruce will welcome guests as they enjoy a light buffet lunch, and briefly share his approach to hotel e-mobility at Hotel Marcel. Guests have access to Tesla Superchargers, Level 2 chargers under a solar canopy and a custom electric shuttle van.

Hotel Marcel New Haven with solar canopies in foreground

You will learn firsthand from expert guest speakers about:

  1. Hotel Marcel’s guest experience in e-mobility,
  2. The state of public EV charging and opportunities for improving it,
  3. The latest updates in state and federal EV/EVSE incentives and V2G,
  4. Best practices for transitioning vehicles and homes to all-electric,
  5. How to move municipalities to 100% clean, renewable energy,
  6. The societal and environmental benefits that proposed regulations for light, medium and heavy-duty vehicles under Advanced Clean Cars II (ACC II) provide for Connecticut.
  7. Zoning for EV readiness

Date: September 9, 2023

Hours: 12:00-4:30

Buffet Lunch: 12:00
Presentations: 12:00-3:00
Networking and Car Show 3:00-4:30

Host: Hotel Marcel, 500 Sargent Drive, New Haven, CT 06511

Organizer: EV Club of CT

Partner: Tesla Owners Club of CT

Thank You to Our Generous Sponsors: Hotel Marcel, Live Green CT, EV Connect, Chargepoint, Maxwell Vehicles, and the Greater New Haven Clean Cities Coalition.

Live Green Connecticut

 

EV Connect is a sponsor of NEEVS.

Chargepoint

Greater New Haven Clean Cities Logo

Maxwell vehicles logo

Hotel Marcel New Haven at dusk

Speaker Schedule:

12:00-12:15: Welcome address from Bruce Becker, lead architect and owner/developer of Hotel Marcel New Haven and Chairman of the EV Club of CT. Guests will be treated to an overview of the e-mobility customer experience at Hotel Marcel, the country’s first zero emissions and Passive House hotel.

12:15-12:45: Out of Spec Dave will share his experiences charging his EVs at various public charging stations, sometimes across long distances, to map the current state of publicly-available EVSE and how the customer experience can be improved to accelerate EV adoption.

12:45-1:15 Mark Scully, President, People’s Action for Clean Energy (PACE) will present their model for decarbonizing at the municipal level. PACE is an all-volunteer public health and environmental organization formed in 1973 by a group of concerned Connecticut citizens to promote the development of clean energy, encourage energy efficiency and conservation and challenge Connecticut’s commitment to nuclear power. Over many years, PACE has engaged in education, outreach and advocacy on clean energy issues. PACE is committed to developing a pathway to a 100% renewable future, free of fossil and nuclear fuels. PACE is the largest all-volunteer organization in CT working on these issues, and is a non-profit 501(c)(3) organization.

1:15-2:05: Vehicle and home electrification panel discussion + Q&A with moderator Barry Kresch, President, EV Club of CT, and panelists Paul Braren, owner of TinkerTry and an all-electric home, and Rick Rosa, Senior Manager for EV Programs and Products from Avangrid/United Illuminating. Decarbonizing vehicles and the built environment requires working with a suite of incentives, electric utility programs, and equipment vendors. Learn about the latest EV/EVSE incentives and how the EDCs (utilities) are thinking about Vehicle to Grid (V2G) connectivity. Paul will share best practices and lessons learned from going all-in on his home remodeling by enrolling his Tesla Solar Roof and Powerwalls in Tesla’s Virtual Power Plant (VPP) with ConnectedSolutions program, powering two EVs utilizing Managed Charging and Charge on Solar, maximizing efficiency and savings by installing a SPAN smart electrical panel and installing heat pumps for year-round comfort with no natural gas.

2:05-2:30: Charles Rothenberger, Climate & Energy Attorney, Save the Sound will present highlights of the Regulations for Light, Medium and Heavy-Duty Vehicles under Advanced Clean Cars II (ACC II). In July 2023, Connecticut became the latest state to initiate adoption of the Advanced Clean Cars II rule, which will benefit society by requiring manufacturers to increase sales of electric and other zero-emission models within the state over time, culminating with 100% of new sales being ZEV in 2035.

2:30 – 3:00: Daphne Dixon, Co-founder and Executive Director, Live Green Connecticut and Director, Connecticut SWA Clean Cities Coalition, will present about Zoning for EV Readiness, a must attend for municipal decision makers.

Hotel Marcel bar and dining room
Hotel Marcel bar and dining room

Networking and Car Show 3:00-4:30: Enjoy beverages and food at the hotel bar while networking with other guests, and head outdoors to the lot adjacent to Hotel Marcel’s Superchargers to enjoy the car show while networking with EV owners that are members of Tesla Owners Club of CT, the EV Club of CT and the Westport Police Department.

Hotel Martel New Haven Superchargers with Teslas
Hotel Marcel New Haven Superchargers with Teslas

RSVP required: Register here.
Interested in a sponsorship? Please email evclubct@gmail.com.

Parking at the hotel is available to all. Club members that are participating in the car show, please register your vehicles for that portion of the event.

Guests may register for:

1) both event tickets: the symposium and car show (only if you’re showing a car),

2) only the symposium (attending the car show is open to all registered symposium guests)

3) only the car show (if you’re showing a car and will not be attending the symposium).




Inflation Reduction Act EV Incentive Updates – May 2023

photo credit: Paul Braren/Post: Barry Kresch

IRA Went into Effect with Rule-making Still a Work in Progress

The most challenging part of the rule-making has to do with the rules around battery minerals. The IRA requires a minimum percentage (40% in 2023) of battery critical minerals be sourced either domestically or with a free-trade partner. The IRS is still accepting comments, through June 16th. The EV Club is working with the Electric Vehicle Association (EVA) and the Clean Vehicle Coalition (CVC). Our primary input on this is that manufacturers should certify compliance on a model-year basis since that is how they plan their manufacturing and that is how consumers think about cars. Furthermore, once a model/model year is certified, it should be the manufacturer’s responsibility to ensure compliance. And if compliance isn’t achieved, the manufacturer would be responsible for the resultant tax liability. Let’s keep consumers out of the VIN-checking business and definitely out of exposure uncertainty.

IRS Flexibility

The certification question notwithstanding, what we are hearing is that the manufacturers are generally pleased with IRS rule-making. They expanded the list of free trade partners. They are allowing the OEMs to self-certify and they have 3 options for doing so: point in time, individual vehicle, or average over a defined period of time (year, quarter, month). We are trying to find out the limits of the self-certification and whether there is exposure for the consumer. More to come on this.

What the OEMs are most concerned about is when the foreign entities of concern rule kicks in. They have not figured out how to get China completely out of the equation.

Used Teslas

If anyone has looked at the fueleconomy.gov page to view the makes that are eligible for the used EV incentive, you will see that Tesla is conspicuously omitted. We have been advised that the reason is that the Tesla paperwork is churning slowly through the wheels of the IRS bureaucracy. Tesla is trying to get it unstuck. We expect that to happen reasonably soon.

Leasing

Leasing has emerged as a big loophole. The IRS has ruled that consumer leases are commercial transactions and not subject to any of the restrictions associated with a consumer purchase. All leased vehicles, no matter where the battery comes from, no matter how high the MSRP or the lessee’s income, are incentive-eligible. However, it is our understanding that Tesla, General Motors, and Ford are not passing through the incentives for leasing customers at this time. They are not legally required to do so, but it is not consumer-friendly in our view. If any reader has different information, please let us know.

Transfer Provision

This begins in 2024. The consumer will have the option of transferring the incentive, which is a tax credit, to the seller, who then gives the incentive to the consumer as a rebate. That sounds complicated but it boils down to the incentive becoming cash on the hood, so it’s unequivocally a good thing. Not only does the consumer not have to wait for their taxes to be filed, but for people who don’t have enough tax liability to burn off a tax credit, this will enable them to use the incentive. So, this is an important equity provision. Unlike with a lease, a transfer has to be passed to the consumer. You may ask what happens if the consumer seeks to use the transfer when leasing a vehicle? Good question. To be continued.

Joint Ventures

Could joint ventures be a way to skirt the foreign entity of concern rules? Another good question. Ford announced a joint venture with the big Chinese battery manufacturer, CATL, to build a plant in Michigan. Our understanding is that it is likely that the output of this plant will be incentive-eligible because Ford owns the plant and is licensing IP to make LFP batteries from CATL. Still, we await a final ruling.




What The Consumer Needs To Know About The New Battery Rules

Photo above: Ford expects its Mustang Mach-E to qualify for half the incentive; Chevy expects the same for its Bolt.

Battery Rules Issued

January 1 came and went. The new federal incentives in the Inflation Reduction Act became law but the implementing agency, the IRS, had not completed rule-making for several portions of it, most particularly how manufacturers can be in compliance with the new rules for sourcing and refining of critical minerals and battery assembly. The IRS said it needed until March. True to its word, the rules were issued on March 31 and take effect April 18th. This interim period allows manufacturers to determine which vehicles will be eligible and whether the certification will be for the full $7500 credit or only half.

Consumers have gotten a benefit from this delay as more vehicles were temporarily eligible. Many vehicles are expected to lose incentives due the rules. If you have cash burning a hole in your pocket and are in the market, you can still move fast and pick up an EV with the full incentive applied (assuming the other criteria are met). But you have to take possession of it before April 18th. The incentives are applied, in IRS speak, at the “date placed in service.”

What Rules Apply

The rule-making itself is highly technical in nature. The law requires that 40% of the sourcing and refining of critical battery minerals occur either domestically or with a free-trade partner and that 50% of battery assembly takes place in North America during 2023. Going forward, these levels escalate. So, how do you define 40%/50%? The IRS has determined that it is to be based on value. So how does one define value? What is the legal definition of a free-trade partner? (The ink is still wet on some frantic dealmaking that happened so that some friendly nations, e.g. Japan and South Korea, could officially become free trade partners.)

We’ll know on April 17th what vehicles are eligible for how much of the incentive, but it will be a continually evolving list as manufacturers wrangle supply chain logistics and as the requirements escalate. It is possible that a vehicle eligible in one year loses eligibility in a subsequent year if the supply chain has not maintained pace with the requirements. And it has to be done in an environment of (presumably) a rapid ramping up of production volume. This article from Reuters includes statements by some manufacturers regarding which vehicles stand to lose incentives. This is the Department of Energy page that lists qualifying vehicles. It will be updated on April 17th.

Making Sure the Vehicle is Incentive-Eligible

It certainly helps if a manufacturer certifies that a given vehicle is incentive-eligible. But the IRS is officially determining eligibility based on the VIN. This is a new world we’re about to enter, and with all that is being written in the press about how these incentives work, there hasn’t been much discussion of this potential for a consumer to be left in the lurch.

It is possible that two of the same make/model/model year vehicles have different incentive statuses, based on when and where the manufacturing and delivery take place. When filing for the tax credit, the VIN is required and Treasury matches it to its records. It is advisable to check the VIN before buying the vehicle. That can be a hassle, as for a made to order vehicle, the VIN isn’t available until late in the game.

The EV Club, in partnership with the Electric Vehicle Association, recommended that the IRS use make/model/model year and deal with it at the manufacturer level. Our take is that asking consumers to be in the VIN checking business is a clunky way to go. It could cause an unpleasant surprise. It definitely fosters confusion.

For readers of this blog, if you buy an EV after the new rules are in effect, we are interested in hearing about the process and if you felt protected if you were promised an incentive.

Leasing

For those who lease, none of the rules apply, not even North American final assembly. The full incentive applies. Just remember, the finance company gets the incentive. It is up to the consumer to verify it is being passed along, which is not legally required. It is called a subvented lease.

Other Rule-making

Yes, there’s more, particularly the foreign entities of concern rule and the transfer.

Foreign Entities of Concern

The foreign entities of concern rule, which will phase in during 2024 and 2025, will likely include several countries, but is really all about China, which currently dominates the battery mineral supply-chain and has a lot of battery IP. What about Chinese investments in this country? Ford recently announced a joint venture with the big Chinese battery company, CATL, to build a plant in Michigan to manufacture LFP (Lithium Iron Phosphate) batteries. Does this comport with the law? In this case, Ford is banking on the fact that it is only the IP that comes from CATL and that the plant is owned by Ford. This is an article in Politico that discusses it in some detail but stops short of making a definitive statement. Stay tuned.

Transfer Provision

The transfer provision kicks in as of Jan 1, 2024. This year, the incentive is a tax credit. There are two drawbacks to tax credits. The first is that you have to wait until you file your taxes to get the incentive. The other is that you need to have the tax liability to burn it off. The transfer provision allows the consumer to transfer the incentive to the dealer or manufacturer and take the credit as a “cash on the hood” rebate. Unlike with a lease, the law requires the dealer to transfer the full amount of the credit to the consumer. That solves the timing problem. But what about if the consumer doesn’t have $7500 of tax liability? Could there be a claw-back? That seems unlikely. The intent of the transfer provision is, in part, to be an equity measure, so people without tax liability could take advantage of the incentive.